Ministers say a "strong euro is in the interest of the euro area" - Interventions on the market are still possible

Versailles, 11/09/2000 (Agence Europe) - "Interventions" on the exchange markets to support the euro in relation to the dollar "remain one element that is available at all times". This short phrase of Laurent Fabius, French Finance Minister and President-in-Office of both the Eurogroup and the EcoFin Council, was the media highlight of the informal meeting that finance ministers of the countries of the euro area held late Friday afternoon. It was taken up word for word by Christian Noyer, Vice-President of the European Central Bank, present at the final press conference, as was Commissioner Pedro Solbes. This affirmation not appearing on the official declaration published by the Eurogroup to mark the confidence of ministers, the Commissioner and the ECB in the euro, Mr. Fabius answered questions as to whether ministers had decided against having their word to say on possible intervention in the following words: "There is one responsibility that beholds ministers, and there is another that beholds the European Central Bank (…) We are in perfect agreement among ourselves". He then stipulated that, in this matter, there were "liaisons between ministers and the ECB", the former able to impart their analyses ("as is only normal", he commented) whereas "triggering (an intervention: Ed.) is the ECB's responsibility".

Here is the text published by the Eurogroup:

"The Euro area Ministers, the Commissioner and the President of the ECB have discussed economic prospects of the Euro area in light of the high oil prices and recent financial market developments. They share the view that growth remains very robust in the Euro area. The fiscal consolidation and the reform effort, especially in the tax field, are well underway. Ministers stress their determination to speed up this process and to promote the necessary structural reforms in view to increase the growth potential of the Euro area. The ECB is committed to ensure that current growth will remain non-inflationary. The Eurogroup and the ECB reiterate their common concern that the current level of the euro does not reflect the strong economic fundamentals of the Euro area. They agree to follow closely the situation. A strong euro is in the interest of the Euro area."

At the press conference Friday evening, Mr. Fabius also provided the following details and comments"

• the Eurogroup analysed the economic situation in general and the economic performance of the Euro area which is "welcomed by international oganisations";
• the Eurogroup discussed ongoing structural reforms - which concern "not only the fiscal (budgetary) area - and "observed with satisfaction that there was strong convergence along the lines desired in previous years". EUROPE recalls that it was especially the structural reforms in Germany, France, Ireland and Italy that were passed under review in Versailles. Mr. Fabius said that, as far as the members of the Eurogroup were concerned, they wanted to "continue and amplify the structural reforms and say that the current level was not as is should be", considering that saying this was in itself "something important";
• "the communiqué is not enough on its own", said Fabius to the question as what the impact it would have on the markets. It is the expression of the conviction reaffirmed by members of the Eurogroup that growth is robust, that saving is excellent, that deficits are falling, that exceptional revenue is being allocated to debt reduction, that the fundamentals are often good. "The climate is one of confidence in our economy", Fabius summarized, speaking of a "declaration made on behalf of the Eurogroup, of all those taking part" ("The ministers, the Commission, the European Central Bank clearly see themselves in this declaration", he explained);
• the members of the Eurogroup "unanimously agree that the euro is too low" and that it needs to rise, reason why finance ministers must, for their part, target and accelerate structural reforms" (at the meeting, Laurent Fabius, stipulated, "the financial, labour and competition aspects" were cited);
• regarding the setting of exchange rates, "rationality is not always at the rendez-vous" and the members of the Eurogroup are turning to the future with confidence, in the sense that they are convinced that the situation in the area is "strong".

Price of oil: Eurogroup prepares deliberations in Council

The Eurogroup had a fairly lengthy discussion on issues linked to the price of oil. Mr. Fabius nevertheless refused to enter into the details of this discussion in the sense that it would be "broadened" the following day at the level of the Fifteen. He did, however, recognise the existence, among all the members of the Eurogroup, of "real concern" at the levels reached in the price of oil. Several ministers, said Fabius, raised the problem from the political point of view, stressing that "the decision taken by the Opec countries raised political and economic problems".

"We must respond to it", said Mr. Fabius, adding that the members of the Eurogroup had backed the words of Mr. Solbes on the need to develop competition, and also referred to an "agreement on the need to step-up efforts in energy saving".

Next President of Eurogroup, Mr. Reynders sets out how he envisages his role and criticises Mr. Duisenberg's absence in Versailles

"I would ask Mr. Duisenberg to take an effective part in the meetings of the Eurogroup". Belgian Finance Minister Didier Reynders did not conceal his irritation at the absence in Versailles - due to a trip to Canada - of the President of the European Central Bank, Wim Duisenberg. An irritation, he explained, that was shared by a certain number of his colleagues, which different sources confirmed. "I find it regrettable that at the first informal meeting enabling us to go further in the dialogue (between the Eurogroup, EcoFin and the ECB, notably on the level of the euro in relation to the dollar and the possible monetary consequences of the oil price situation: Ed.), the President of the European Central Bank should not be there", said Reynders, before adding: "Having to read the position of the ECB in the press and not being able to hear its President, I find that totally abnormal!" These words are all the less innocent in that, from 1 January of next year and throughout 2001, Mr. Reynders will be the President of the Eurogroup, his Swedish colleague being unable to take up this position as Sweden is not a member of the Euro area (Bosse Ringholm will chair the EcoFin Council in the first half of the year, before handing over to the Belgian minister). In the next semester, "the President of the Eurogroup should represent EcoFin at ECB meetings", said Didier Reynders, who, while acknowledging that this responsibility was that of the EcoFin Council President due to the Treaties, said: "But until shown otherwise, it is also the EcoFin Council which decides who represents it".